Priya Patel“`html
TLDR:
- DLAI and FACE are rallying for fintech self-regulation amid regulatory scrutiny.
- Industry bodies believe self-regulation can foster trust between the regulator and fintech firms.
Main Article:
DLAI and FACE, representing around 120 fintech firms, are advocating for self-regulation within the industry to avoid conflicts with the RBI. The recent tensions between the central bank and certain stakeholders, triggered by actions against Paytm Payments Bank, have highlighted the need for clearer guidelines and enforcement mechanisms. Although the SROs do not have enforcement powers, they hope that the draft guidelines released by the RBI in January will help them enforce decisions among member firms.
Their efforts come amidst a growing perception within the fintech industry of regulatory obstacles hindering sectoral growth. While RBI Governor Shaktikanta Das clarified that the central bank’s actions were directed at a regulated entity and not against the entire fintech sector, concerns remain about the need for responsible behavior among digital lenders. DLAI and FACE are working towards standardizing norms and enforcing compliance within their member firms, with the hope of gaining regulatory approval for their self-regulatory initiatives in the future.
RBI has been urging fintechs to take self-regulation seriously, highlighting the importance of industry best practices, privacy, data protection, and ethical business conduct. The draft guidelines explicitly mention the role of SROs in fostering the development of the fintech ecosystem, indicating a need for coordinated efforts within the industry. Both DLAI and FACE are advocating for a constructive role in shaping the sector and promoting compliance as a cornerstone of good behavior, aiming to establish legitimacy, credibility, and enforcement mechanisms through self-regulation.
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